Trust drives business performance. PricewaterhouseCoopers’ (PwC) research indicates that when companies focus on mission and their own distinctive capabilities, especially their values, they generally achieve significantly higher profitability levels as compared to competitors that do not. Consumers make choices not just based on the service provided, but more and more because of overall trust in the organization. PwC’s recent article, “Redefining Business Success in a Changing World, CEO Survey”, contained data from interviews with 1,409 CEOs in 83 countries. Most of the CEOs (55%) are concerned about the lack of trust in business today; just 37% expressed this concern 3 years ago.
CEOs understand that customers, employees and other stakeholders increasingly care about what an organization stands for. Of the CEOs surveyed, 84% believe customers value how organizations conduct themselves in society. Most (69%) believe their organizational purpose involves adding value for stakeholders beyond just customers and investors and their mission should embrace the employees, wider society and even the organization’s supply chain. Many CEOs (45%) felt that serving this broad constituency had always been in their mission. Moreover, evolving societal expectations caused an additional 24% to broaden their mission over the last three years in response.
An organization positions itself to create the best value for customers and investors, and also for society when it aligns its strategy around its values and purpose, commits to them and effectively executes the strategy with them in mind. This builds trust, and trust attracts new customers and retains existing ones. Prospective employees that are aligned with the values and mission are attracted to the company, existing employees choose to stay, partners are more willing to collaborate, and investors are more prepared to entrust stewardship of their funding.
Most CEOs (64%) believe that corporate social responsibility is core to their business, not just a “program”. A CEO taking a values-based stand on issues that their customers care about enhances brand loyalty and trust. In fact, research conducted jointly by the Duke and Harvard Business Schools suggests that CEO activism, not only can affect public opinion, it can increase interest in the company’s products. Take the case of Apple’s CEO Tim Cook. He supports LGBT nondiscrimination and marriage equality, and he publicly states his opposition to state laws deemed adverse to LGBT Americans. It appears that Mr. Cook’s values, Apple’s core values and those of Apple customers are aligned. The Duke/Harvard data show that the benefits for Apple outweigh possible harm as customer gains from Mr. Cook’s advocacy outweigh potential losses by those who disagreed with him. Customers increased their trust in Apple as a result.
There are more channels than ever to create a two-way street for learning from stakeholders and disseminating information to them. For example, social media can be used to “listen actively” to stakeholders and in so doing companies gain valuable insights on motivations and priorities of customers, investors and other stakeholders, which can be continually employed to help develop strategy. In disseminating information, describing how the organization is serving stakeholders can be difficult to articulate. Many CEOs (33%) feel a conflict between financial expectations and wider stakeholder needs, as long-term strategies that build trust may appear counter to the often-intense focus on short-term performance. Even so, PwC found that CEOs (82%) prioritize long-term over short-term views. They know and understand the significance of effectively communicating their values, the organization’s values and how the organization’s mission serves society as a whole.